Political Entrepreneurs

The Economic Engine of Political Change

Category: Competition in Ideas

Richard Thaler is the 2017 Nobel laureate in economics for his work in behavioral economics. This comes 15 years after the prize was awarded jointly to Daniel Kahneman for pioneering economic psychology and Vernon Smith for pioneering experimental economics. As the discussion unfolds, we should remember that “people are rational” is a starting point — a simplifying assumption for building models of human interaction. It is not a description of human interaction. So when lab…Read more»

I’ve been teaching college economics for a little over two decades now. Years ago I learned that I need to watch very closely my choice of language in the classroom. For example, early in my teaching days I would lace a “hell” and a “damn” or two into my lectures. I can’t say I pondered the reasons very carefully. I suppose I was just trying to be relatable and have an effect. But soon I…Read more»

Originally Posted to Division of Labour (DOL) on April 16, 2007 at 03:39 PM in Culture (Links have been updated and typos corrected.) Kurt Vonnegut passed away last week. I am no Vonnegut expert, although I’ve read some of the novels and found much of it disturbingly delicious and deliciously confounding. DOL readers are probably familiar with the short story, “Harrison Bergeron” ( text here ), which I first read as an undergrad in Eric Schansberg’s poverty…Read more»

The Vincent & Elinor Ostrom Prize awards $1,000 for the best combined paper & presentation at the annual meetings of the Public Choice Society. Vincent and Elinor Ostrom both served as Presidents of the Public Choice Society. The naming of this Award recognizes their ceaseless dedication to working with graduate students to improve both their writing and presentation skills, a dedication that is captured nicely in the documentary film about the Ostroms by Barbara Allen. The Prize is selected according to…Read more»

Initially written as “The Decline of Newspapers is a Sign of Market Success” for Info Tech & Telecom News, July 2010, by Edward J. López[1] The decline of newspapers is real. Since 1970 the number of dailies in America has declined by 20 percent, and circulation per capita has been cut in half.[2] More recently, advertising on news print is down 50 percent since peaking in the year 2000. Even including the more recent stream…Read more»

Mercantilists formulated a system of political economy that put the strength of the state as the primary end. Economists supporting this doctrine, whether or not they realized, were defenders of the existing order. The mercantile system inverted the preference ordering appropriate for science, submitting the search for truth to some alternate end. Investigation was in the service of enriching and empowering the state and agents connected to it. Much as still occurs today, the status…Read more»

Language is the ultimate archetype for emergent phenomena. Its structure is the archetype for the structure of knowledge embodied in those phenomena. Nobody plans language. Attempts at planning are worthy of the cynicism they receive. Remember the zealous high school teachers and college professors who preached the gospel of MLA formatting? This privileged group of experts may do their best to enforce homogeneous belief upon those who appear to be their subjects, but the emergent features of…Read more»

Imagine finding yourself on the campus of UCLA in the late 1940s. If you were to have ventured anywhere near the economics department, you might have bumped into one of UCLA’s newest hires, who would become among the most insightful and original economists of the twentieth century, a vigorous man with the interesting name of Armen Albert Alchian (born April 12, 1914). Alchian was a maverick economist who always held the respect of the mainstream. You…Read more»

Today would have been Norman E. Borlaug’s 102nd birthday. He died in 2009 after an enormously productive life of helping others to help themselves. Known as the “father of the Green Revolution” for introducing high-yield wheat varieties to impoverished economies, his work was recognized with a Nobel Peace Prize among other awards for “the man who saved a billion lives”. I like the photo here because it evokes the academic scribbler side of his entrepreneurship but also…Read more»

“ The Seismic Shift in Irish Values, and One Reason It Happened ” Huffington Post 5/24/2015 James Peron Historically, the more market-oriented the economy, the more the well-being of LGBT people increases. Politicized markets require political power, something sexual minorities rarely have, but depoliticized economies only need an entrepreneur willing to cater to a minority. Soviet-style, top-down economies would never allocate paper for books on gay issues, let alone for a thriving gay media. That required a bottom-up, depoliticized or less-politicized economy, where entrepreneurs only had…Read more»

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From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.